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August 27, 2020
What is Term?
Term Life Insurance gives you coverage for a fixed number of years, for example 10, 15, 20, or 30 years varies based on the plan and the insurance carriers you choose. Typically Term Life Insurance is Cheaper, in other words have lower premium than Whole Life Insurance. Term Insurance is commonly purchased to protect a major debt like Mortgage, company, business, or other estate.
Term Life Insurance could be Level Term or Decreasing Term:
Example:
John is 33 years old married to Betty who is 30 years old. They bought a house accumulating a mortgage of $300,000 on 30 years payments. John purchased a 30 years Term Life Insurance policy with a coverage amount of $400,000. John’s rationale is to get protect his wife Betty from paying the mortgage debt on her own in case of his death.
Betty, on the other hand, purchased a policy to protect John as a beneficiary. In case of Betty’s death within the 30 years term, John would have coverage to pay the mortgage.
There are many factors that play a role when choosing between Term Life and Whole Life insurance. Primarily based on need, budget, age, and risks. You can reference to Term vs Whole Life to learn more about the differences.
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